Mid-range property rentals record high

Bangalore’s residential rentals in central locations for mid-range properties for second quarter (Q2) of 2008 have recorded highest values. Mid-range developments are properties quoting rentals between Rs 100,000 and Rs 120,000 per month.

The values have gone up by 8 to 10 per cent in two quarters and the main reason attributed for this sharp movement is lack of new projects launched by prime developers.

Rentals of mid-range properties (Rs 20,000 to Rs 40,000) located in eastern (Whitefield and Marathahalli) and south and south-eastern (Sarjapur and JP Nagar) parts of the city have fallen by 11 per cent and 4 per cent respectively.

The excess supply of all grades of developments, emergence of newer residential locations and sudden shift in interest towards north Bangalore have impacted the eastern and southern markets to a large extent, said Cushman Wakefield-India’s Q2 Bangalore-residential report. Also Whitefield, Sarjapur Road, Outer Ring Road and Bannerghatta Road have an abundance of existing and upcoming residential developments of various grades, leading to excess supply.

“However, the rising rate of inflation and the current cash crunch has led to stabilisation in rentals across most areas, barring a few projects in both high-end and mid-range sectors since the first quarter,” the report added.

As for the capital values, prices of mid-range projects remained constant since the first quarter; showing marginal appreciation over the last six months in a few markets like central locations (1 - 3%).

In case of the high-end segment, central and off central locations witnessed a marginal increase due to limited availability of land parcels and new projects.

The coming quarter is not likely to witness any major changes in either capital or rental values in Bangalore’s residential sector. The current economic scenario and the volatile stock market situation have changed the outlook for investment options in this sector.

Capital values are likely to remain stagnant across all regions in the coming months, but are expected to weaken in Whitefield, Sarjapur Road, Outer Ring Road and Bannerghatta Road.